Morrisons sells its chain of convenience stores
Supermarket chain Morrisons has agreed to sell 140 M local convenience stores for about £25m.
It said the buyer was a team led by the retail entrepreneur Mike Greene, funded by Greybull Capital.
The shops will be rebranded as "My Local". The 2,300 staff will be kept on, with an extra 200 jobs to be created by reopening 10 shops that are currently closed.
Morrisons announced a review of its convenience store business in March.
Earlier this year, the retailer reported an annual loss of £792m.
It now plans to concentrate on its core supermarkets business. Morrisons will keep five M local shops that are either on petrol forecourts or can be converted into small supermarkets.
Analysis: Emma Simpson, business correspondent
Convenience stores are the fastest-growing format in the UK. So why would Morrisons want to offload this part of its business? It only opened its first M Local in 2011, years later than its rivals who had already set up shop in prime spots.
Location is key when it comes to convenience. When the former boss, Dalton Philips, took the helm at Morrisons it had had no presence in either convenience or online. The race was on to catch up.
But in its haste the company bought stores that weren't always in the right location - such as 49 former Blockbuster outlets. One retail finance boss said at the time that he couldn't believe Morrisons had bought the whole lot.
In March, its new chairman, Andy Higginson, hit the pause button on expansion, saying 30% of them were not working. He's brought in a new chief executive, David Potts, who has wasted no time in shaking things up.
So what can Mike Greene do that Morrisons couldn't? He has certainly got bags of expertise. His team is confident it can improve the range and availability of products through more efficient and frequent deliveries. If they fail, it's Morrisons that will be on the hook for the store leases.
Morrisons opened its first convenience store in 2011, but the bulk of them have been open for less than two years.
They were supposed to boost the supermarket chain's presence in south-eastern England.
It expects to lose about £30m on the transaction and will also be remain liable for the leases on the shops if the new business fails.
Despite the failure of M local, Morrisons chief executive David Potts said: "We remain open to other opportunities in convenience in the future."
He said the reason M local failed was because it was "unable to scale". The stores made an operating loss of £36m last year.
Mr Greene is a former chairman of the Association of Convenience Stores and founded the Association of News Retailing. He chairs or is on the board of several other companies and has considerable experience with convenience stores.
Greybull Capital is the investment firm that last year put up £125m to rescue Monarch Airlines.
The 10 shops reopening under the My Local brand are:
- Shirley, Southampton
- Sutton Coldfield
- Rayleigh, Essex
- Paignton, Torquay
- Ramsgate, Kent
- Camberley, Surrey
- Littlehampton, Sussex